The U.S. government has appointed State Street and the Bank of New York Mellon as custodians of two key programs in the U.S. efforts to shore up the financial sector.
The U.S. Department of the Treasury tapped the Bank of New York Mellon’s securities services business to support the government’s Troubled Asset Relief Program authorized under the Emergency Economic Stabilization Act. The Treasury has hired the company to provide the accounting of record for the portfolio, hold all cash and assets in the portfolio, provide for pricing and asset valuation services and assist with other related services. The Bank of New York Mellon will serve as auction manager and conduct reverse auctions forthe troubled assets. The Treasury received 70 submissions for the appointment, of which 10 met the eligibility requirements and minimum qualifications. The contract will last three years.
A PDF of the bank’s contract with the government is available on the Treasury’s Web site.
State Street Bank and Trust Company has been appointed custodian and administrator of the Federal Reserve’s Commercial Paper Fund Facility’s special purpose vehicle (SPV) that will purchase eligible three-month unsecured and asset-backed commercial paper from eligible issuers using financing provided by the Federal Reserve Bank of New York. The SPV will hold the commercial paper until maturity and will use the proceeds from maturing commercial paper and other assets of the SPV to repay its loan from the New York Fed.
“The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors, themselves often facing liquidity pressures, have become increasingly reluctant to purchase commercial paper, especially at longer-dated maturities,” the New York Fed said.
Full details of the commercial paper program are available on the New York Fed’s Web site.